New Sparrows Point owners suggest (once again) most of mill will be scrapped

Chicago liquidator Hilco Trading and St. Louis property redeveloper Environmental Liability Transfer announced today the completion of their $72.5 million purchase of the Sparrows Point steel mill – and strongly suggested that only a sliver of the present mill will ever be used for steel manufacturing.

Today’s sale marks both the end of RG Steel Sparrows Point as an active facility (in reality, steelmaking was suspended last June) and as a union shop controlled by the United Steelworkers union (USW).

Beginning tomorrow, the new owners will have a free hand to dispose of the mill’s assets – and 3,400-acres of prime land along the outer Baltimore harbor.

Fate of Laid-off Workforce Unanswered

In their release today, Hilco and ELT offered few concrete details of their intentions.

But reading between the lines – and fully in keeping with prior filings in the bankruptcy case – the group gave little hope that the integrated mill would be reopened and employees reinstated.

Significantly, the laid-off force of 1,600 workers and their union were not even mentioned in the release. The Brewpreviously reported that the Hilco-ELT group went to great lengths in its purchase agreement with RG Steel to disavow any collective bargaining agreement or obligation to RG employees after the sale was completed.

Today’s release strongly suggested that the Hilco-ELT group will attempt to sell the cold-mill unit – which it described as “self-contained” even though it is connected to the mill’s steam and other infrastructure – and scrap the rest of the plant.

In terms of employment and output, the cold mill consists of about 15% of the total facility. It is the final step of a lengthy steelmaking and fabricating process that begins at the iron-producing blast furnace.

In order to operate independently, the cold mill would have to use semi-finished “hot-bands” obtained from other mills or from overseas.

Structural Demolition

ELT, a company that specializes in environmental remediation of former factory sites, purchased the cold mill mill and associated warehouses, along with Sparrows Point’s land.

While saying the group might entertain the sale of the mill “in its entirety,” today’s release added, “We are also considering removal and resale of industrial equipment and structural demolition, followed by environmental remediation of the site as a precursor to redevelopment.”

The group also indicated keen interest in finding ways to develop some of the land into a port facility.

The Maryland Port Administration had been negotiating with RG Steel for the sale of Coke Point as a site to contain harbor dredge.

New Facility for Port of Baltimore

But the MPA and Baltimore County Executive Kevin Kamenetz have recently been talking up the use of the mill’s deep-water port for super-sized ships that will soon be passing through an enlarged Panama Canal. The port is seeking to expand its facilities to meet these needs.

Citing those plans, the release said that Hilco and ELT are “committed to working with local and state leaders and will keep communications open over the coming months.”

The leadership of USW Local 9477 insists that it will find an operator for all or part of the Sparrows Point mill.

The first step, says union president Joe Rosel, is to talk to Hilco and ELT. Despite repeated vows to do that, the union has yet to meet with the new owners.

A union officer today said such a meeting with representatives of Hilco and ELT is scheduled for next week.